How Much House Can You Afford? The 28/36 Rule, Explained
Published 2026-07-31 · Migrify.AI
The fastest way to estimate how much house you can afford is the 28/36 rule — the same guideline many lenders use when underwriting your loan.
The 28/36 rule
- 28%: your total monthly housing cost (principal, interest, property tax, insurance, and PMI) should stay under 28% of your gross monthly income.
- 36%: all your debt payments combined — housing plus car loans, student loans, and credit card minimums — should stay under 36%.
A worked example
Say your household earns $100,000 a year, or about $8,333 a month. The 28% cap puts your housing budget at roughly $2,333 a month. At a 6.66% rate on a 30-year loan with 20% down, 1.2% property tax, and typical insurance, that supports a home price of about $340,000–$360,000 — the monthly payment on a $340,000 home works out to around $2,208 in our free mortgage calculator.
Now the 36% side: if you also have a $450 car payment and $250 in student loans, your total debt cap of $3,000 leaves only $2,300 for housing — so in this example both rules land in the same place. If your other debts were higher, the 36% rule would shrink your housing budget below the 28% number.
The costs first-time buyers miss
- Property tax varies enormously by state — from about 0.3% a year in Hawaii to roughly 2.5% in New Jersey. On a $400,000 home that's the difference between $100 and $820 a month. Check your state on our state mortgage calculators.
- PMI — put down less than 20% and you'll typically pay 0.3–1.5% of the loan amount per year until you reach 20% equity.
- Insurance — averages range from under $1,000 a year in some states to over $4,000 in Florida.
- Maintenance — budget about 1% of the home's value per year.
Work backward, not forward
Instead of asking "what will a lender approve?", decide the monthly payment you're comfortable with, then use a mortgage calculator with taxes and PMI to find the price that produces it. Lenders will often approve more than is comfortable — the 28/36 rule keeps the decision in your hands.
Run your own numbers: the free Migrify.AI calculator shows your full payment — taxes, insurance, and PMI included — in seconds, with no sign-up and no credit impact.